According to a report from Dodge Data & Analytics, Hamilton, N.J., May 2021 saw total construction starts decline by 1% to a seasonally adjusted annual rate of $902.8 billion.

“The brunt of the decline was borne by residential starts, while nonresidential and nonbuilding starts continued their recovery from the COVID-19 pandemic,” according to the report.

In May, nonresidential building starts rose 10% to a seasonally adjusted annual rate of $309.5 billion. Year-to-date, however, these starts were down 5% in comparison to the first 5 months of 2020, and, for the 12 months ending in May 2021 (June 2020 through May 2021), they were 19% lower than June 2019 through May 2020.

Nonbuilding construction starts increased by 5% in May to a seasonally adjusted annual rate of $199.2 billion. For year-to-date through May 2021, total nonbuilding starts were 8% higher than what they were in 2020. However, between June 2020 and May 2021 they were 5% lower than the 12 months ending in May 2020.

In contrast, May 2021 saw residential building starts decline by 10% to a seasonally adjusted annual rate of $394.2 billion, which represents a significant reversal given that, year-to-date, total residential starts were 30% higher than the same period a year earlier. Between June 2020 and May 2021, they were 18% greater than the period of June 2019 through May 2020.

“The weight of higher material prices and a lack of skilled labor are having a direct and notable influence on residential construction activity,” said Richard Branch, chief economist for Dodge Data & Analytics. “These negative factors are expected to continue to impact the sector over the remainder of the year and will result in a less positive influence from housing on overall levels of construction activity.”

Branch added that the nonresidential sector, while feeling similar effects, is continuing its modest recovery from its lows of last summer.

“There are enough projects in the planning pipeline to suggest this trend should continue into next year, but higher material prices will result in longer lead times to groundbreaking and more temperate improvements in nonresidential starts,” he said.